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Rising Unemployment Casts Doubts on President Obama's Economic Recovery Plan

Posted By admin || 31-Aug-2009

Critics of President Obama are taking advantage of the rising unemployment rate to question the effectiveness of his recovery plan and economic leadership, and the huge budget deficit is only adding fuel to their fire.  President Obama is working to show that there are concrete benefits to his recovery plan, saying that his administration expects to save or create 600,000 jobs this summer, thanks to the federal government spending billions of dollars expanding care at health centers, sprucing up national parks, hiring teachers and improving military facilities.

Vice President Joseph Biden outlined 10 major initiatives that, according to him, will "build momentum and accelerate job growth" over the next 100 days.  After Mr. Biden setting out a list of programs - including water and waste projects in rural America and rehabilitation of 98 airports and 1,500 highways - the president took the time to fire back at his critics.

"Now I know that there are some who, despite all evidence to the contrary, still don't believe in the necessity and promise of the recovery act," Mr. Obama said, "and I would suggest to them that they talk to the companies who, because of this plan, scrapped the idea of laying off employees and in fact decided to hire employees. Tell that to the Americans who receive that unexpected call saying, 'Come back to work.'"

The President has the tough task of convincing Americans that the $787 billion American Recovery and Reinvestment Act that he signed into law four months ago is actually working, even as job losses mount.  The Department of Labor recently reported that unemployment has risen to its highest in 25 years, a whopping 9.4 percent.  There is at least one small spot of light in the unemployment gloom--the rate of monthly job losses dropped off in May.  Presidential aides are doing their best to keep people from getting unrealistic expectations that the unemployment rate will turn around soon. One adviser, Austan Goolsbee, told Fox News Sunday the nation was in for "a rough patch," something Mr. Obama's predecessor, George W. Bush, was often fond of saying.

While the administration maintains that 150,000 jobs were either created or saved in the first 100 days after Mr. Obama signed the stimulus bill on Feb. 17, opposition critics remain skeptical.  One of their criticisms lies with including the 125,000 part-time summer jobs for teenagers, which the administration counts as 62,500 full-time job equivalents, in the 600,000 figure the president discussed Monday.

Independent experts say those estimates, which are based on macroeconomic models and projection, are plausible, but caution that it is extremely tough to measure the number of jobs created.  Republicans maintain that the teenage jobs estimate demonstrates that the stimulus plan is not all it was cracked up to be.  "The administration looks dramatically out of touch as they highlight the creation of temporary summer employment in the face of job losses unseen in decades, record unemployment and massive deficits," said Representative Eric Cantor of Virginia, the House Republican whip.

"When they passed this spending plan, Democrats said it would immediately create jobs," said Representative John A. Boehner of Ohio, the House Republican leader, "yet nearly four months later, unemployment has continued to climb and none of their rosy predictions have come true."

Jared Bernstein, the vice president's top economist, addressed reporters on Monday at a contentious White House briefing, admitting that his forecast had been "clearly too optimistic." He claimed it had not factored in account figures from the fourth quarter of last year, because those numbers were not available at the time.  But he also stated that unemployment would be higher if the economic recovery package had not been passed.  "Job losses would have been deeper," Mr. Bernstein said. "The unemployment rate would have been - by our estimate, by the end of next year would have been between one and a half and two points higher than it otherwise will be."

Of course, those whose job losses have forced them to the brink of financial disaster, this is bitter comfort indeed.  If your bills have mounted so high that you can no longer make ends meet, you should consider consulting with an experienced bankruptcy attorney to find out what options you have as the unemployment rate continues to rise.

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